Quick Summary
Quick Summary
- Construction employers covered by MA000020 must follow an industry-specific redundancy scheme under clause 41 — not the NES s.119 provisions
- The construction redundancy definition is broader: it includes resignation after 12 months, not just genuine redundancy
- Redundancy pay starts at 1.75 hours per week of service for under 12 months, scaling up with length of service
- The scheme applies to all MA000020-covered employers regardless of business size — the NES small business exemption does not apply
- Employers must still meet consultation requirements under clause 37 and genuine redundancy tests under s.389 of the Fair Work Act 2009
What Makes Construction Redundancy Different?
If you run a construction business in Australia, you face redundancy obligations that most other employers do not. The Building and Construction General On-site Award 2020 (MA000020) contains an industry-specific redundancy scheme under clause 41 that replaces the standard National Employment Standards (NES) redundancy provisions in s.119 of the Fair Work Act 2009.
This means the usual NES redundancy pay scale does not apply. MA000020 sets its own definition of redundancy, pay scale, and coverage rules. Getting this wrong — by applying NES rules instead of the award scheme — is one of the most common and costly mistakes construction employers make. For comprehensive guidance, see our redundancy advice for employers.
Who Is Covered by the Construction Redundancy Scheme?
MA000020 covers employers and employees in the on-site building, engineering, and civil construction industry. This includes general building and construction, civil construction projects like roads and bridges, and metal and engineering construction work undertaken on-site.
The award does not cover employees under the Manufacturing and Associated Industries Award, the Electrical Contracting Award, the Plumbing Award, the Joinery and Building Trades Award, or mining and quarrying awards. If unsure whether your business falls under MA000020, check the Fair Work Commission or seek advice.
The Broad Definition of Construction Redundancy
The biggest trap for construction employers is the definition of redundancy itself. Under clause 41, redundancy is defined as any situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty.
This captures:
- Resignation — an employee who resigns after 12 months of continuous service is entitled to redundancy pay
- Performance-based dismissal — even if you terminate for poor performance (not misconduct), redundancy pay may apply
- Lack of work or restructuring — the traditional redundancy scenario
This is fundamentally different from the NES, where redundancy pay only applies to genuine redundancy under s.389 of the Fair Work Act 2009. For employment contracts that define termination clearly, visit our employment agreement templates.
Construction Redundancy Pay Scale
The MA000020 redundancy pay scale differs from the NES scale. Key tiers:
| Length of Service | Redundancy Payment |
|---|---|
| Less than 12 months | 1.75 hours pay per week of service |
| 1 year but less than 2 years | 2.4 weeks pay + 1.75 hours per completed week over 1 year (max 4.8 weeks) |
| 2 years but less than 3 years | 4.8 weeks pay + 1.6 hours per completed week over 2 years |
| 3 years or more | Higher tiers apply — use the FWO Pay Calculator for exact amounts |
For the NES scale (which applies to non-construction employers), 1 to 2 years of service gets 4 weeks, 2 to 3 years gets 6 weeks, scaling to 16 weeks at 9 to 10 years. The construction scheme generally pays less per tier — but applies in far more situations.
⚠️ Industry-Specific Scheme Overrides the NES
If your business is covered by the Building and Construction General On-site Award 2020 (MA000020), the industry-specific redundancy scheme under clause 41 applies instead of the NES redundancy pay provisions in s.119 of the Fair Work Act 2009. Using the wrong scheme will result in incorrect payments and potential underpayment claims.
Key Takeaways
Key Takeaways for Employers
- ✓Check whether MA000020 covers your business — the industry-specific scheme overrides the NES
- ✓Redundancy pay may be owed even when an employee resigns after 12+ months
- ✓Misconduct and refusal of duty are the only exclusions from redundancy pay
- ✓Casual service periods do not count — only permanent employment counts
- ✓Apprentice credit is only payable if the apprenticeship is completed plus 12 months further service
- ✓Always use the MA000020 scale, not the NES scale, to avoid underpayment claims
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When Redundancy Pay Is NOT Payable
Under MA000020, redundancy pay is not payable in two circumstances:
- Misconduct or refusal of duty — no redundancy pay is owed for serious misconduct or duty refusal.
- Resignation before 12 months — an employee resigning within their first 12 months is not entitled to redundancy pay.
There is no small business exemption under this scheme, unlike the NES where employers with fewer than 15 employees are exempt from s.121.
Consultation Requirements for Construction Redundancies
Under clause 37 of MA000020, employers must consult with employees about major workplace changes likely to have significant effects, including redundancies. Under s.389 of the Fair Work Act 2009, a dismissal is only a genuine redundancy if the employer has complied with consultation obligations in the applicable award.
Failing to consult can invalidate a genuine redundancy defence, exposing the employer to an unfair dismissal claim within 21 days. For guidance on defending these claims, see our unfair dismissal defence resources. For sector-specific HR support, our construction industry employment law services can help.
Special Rules for Apprentices and Casuals
Apprentices accumulate credit towards redundancy pay but the benefit is only payable if the apprenticeship is completed and the employee remains for a further 12 months. Casuals — casual service periods do not count towards redundancy pay; only permanent continuous service is used. For templates that define employment type clearly, check our free employment documents.
Genuine Redundancy and Compliance Risks
While MA000020 sets redundancy pay rates, whether a dismissal is a genuine redundancy is governed by s.389 of the Fair Work Act 2009. A genuine redundancy requires: the employer no longer needs anyone to do the job, consultation obligations are met, and reasonable redeployment is not possible.
If not genuine, the employee can file an unfair dismissal application within 21 days. Maximum compensation is $95,050 (half the $190,100 high income threshold from 1 July 2026). Critical figures: minimum employment period is 12 months for small businesses (under 15 employees) and 6 months for larger employers. NES termination notice is 1 to 4 weeks depending on service length.
Common Mistakes Construction Employers Make
- Applying NES pay scale instead of the award scale — always use MA000020 clause 41 rates.
- Not paying redundancy on resignation — under MA000020, resignation after 12 months triggers redundancy pay.
- Skiping consultation — failing to consult under clause 37 can invalidate a genuine redundancy defence.
- Assuming small business exemption applies — the NES s.121 exemption does not apply to the MA000020 scheme.
When to Get Professional Advice
Given the complexity of MA000020 redundancy rules and the financial risk of getting it wrong, construction employers should seek professional advice before making redundancies. An employment lawyer can verify award coverage, calculate correct pay, ensure consultation is met, and minimise unfair dismissal risk.
Fair Work Centre provides dedicated employment law advice for Australian employers. We are not a government body — we are an independent private advisory service. Call 1300 161 828 for guidance tailored to your situation.
Frequently Asked Questions
Yes. Unlike the NES under s.119, which exempts small businesses with fewer than 15 employees under s.121, the MA000020 industry-specific redundancy scheme under clause 41 applies to all covered employers regardless of headcount. Small construction businesses must pay redundancy using the same pay scale as larger employers.
Yes, in most cases. Under clause 41 of MA000020, redundancy includes any situation where an employee ceases employment other than for misconduct or refusal of duty. An employee who resigns after completing 12 months of continuous service is entitled to redundancy pay. An employee resigning before 12 months is not entitled to redundancy pay.
Redundancy pay under MA000020 is based on continuous service. For less than 12 months: 1.75 hours pay per week of service. For 1 to 2 years: 2.4 weeks pay plus 1.75 hours per completed week over 1 year, capped at 4.8 weeks. For 2 to 3 years: 4.8 weeks pay plus 1.6 hours per completed week over 2 years. Higher tiers apply for longer service — use the Fair Work Ombudsman Pay Calculator for exact amounts.
The MA000020 scheme replaces the NES for covered employers. Key differences: it applies regardless of business size (no small business exemption), it covers resignation after 12 months, it starts paying from the first day of service, and it uses a different pay scale. The NES s.119 scheme only applies to employers not covered by an industry-specific redundancy scheme.
Yes. Clause 37 of MA000020 requires consultation about major workplace changes. Additionally, s.389 of the Fair Work Act 2009 requires that a genuine redundancy must include compliance with award consultation obligations. Failing to consult can mean the dismissal is not a genuine redundancy, exposing the employer to an unfair dismissal claim within 21 days.
No. Periods of casual service are not counted when calculating redundancy pay under MA000020. Only continuous service as a permanent employee (full-time, part-time weekly hire, or daily hire) counts. If an employee converted from casual to permanent, only their permanent service period is used.
Yes, with conditions. Apprentices accumulate credit towards redundancy pay during their apprenticeship, but the benefit is only payable if the apprenticeship is completed and the employee remains employed for a further 12 months. If the apprenticeship is not completed, no redundancy pay is owed for that period.
Underpaying redundancy is a serious breach. The employee can file an unfair dismissal claim with the Fair Work Commission within 21 days, or contact the Fair Work Ombudsman for underpayment recovery. Employers may face back-payment orders and civil penalties. For companies, Fair Work Ombudsman penalties can reach $93,900 per contravention plus repaying the underpaid amount.
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